European commission explores exit from Russian gas contracts
The European Commission is examining whether there are legal possibilities that would allow European companies to break long-term gas contracts with Russia without incurring substantial contractual penalties, according to the newspaper "Financial Times," citing three EU sources.
As reported by the newspaper, the EC is analysing the contracts for the import of Russian natural gas and the possibility of invoking the force majeure clause, which would allow European importers to terminate the contracts.
The difficulty lies in the fact that the gas import contracts are confidential and often differ from each other. Using the ongoing war in Ukraine as an argument to invoke the force majeure clause, which would allow for the termination of contracts, may not be sufficient from a legal standpoint, the EU source quoted by the newspaper emphasized.
The withdrawal of EU importers from contracts for Russian gas is part of a larger plan, a "roadmap," for the EU to move away from Russian fossil fuels by 2027. This plan aims to make the Union independent from Russian gas supplies and deprive the Kremlin of revenues it uses to wage war against Ukraine.
EU countries paid Russia 34.4 CAD billion for oil and gas in the period from February 2024 to February 2025, the British newspaper emphasized, citing calculations by the Centre for Research in Energy and Clean Air.
Currently, Russian gas accounts for 11% of the gas supplied to EU countries via pipelines, compared to roughly 40% in 2022. At the same time, Russian natural gas supplies in liquefied form (LNG) have significantly increased over the past three years.
The EU has halted 90% of oil imports from Russia and banned the import of Russian coal, but has not included Russian natural gas in this embargo. Imports of the latter resource from Russia to Europe have increased by approximately 60% over the past three years, though they remain at their lowest level since 2022, "FT" reminded.
Originally, the EU's "roadmap" was to be published as early as March, but the publication was delayed due to fears it would be blocked by Hungary and Slovakia, which receive most of the gas transported through pipelines from Russia to the EU. The government in Budapest has threatened to reject the adoption of EU sanctions on gas from Russia. A decision on this matter requires the unanimous consent of all 27 EU member states.
The President of the European Commission, Ursula von der Leyen, told the "FT" that the plan is to be published "within three to four weeks".
EU countries fear forcing companies to break contracts
Despite pressure from Brussels, EU countries are reluctant to force companies to break contracts with Russia for LNG supplies. They fear rising liquefied gas prices, as businesses will struggle with high costs and uncertainty in the geopolitical arena.
The European Commission has granted EU countries powers to prevent Russian and Belarusian operators from connecting to port infrastructure or transmitting gas through EU pipelines. However, in the opinion of governments, this solution does not provide them with the legal means strong enough to force companies to break agreements.
The main ports where Russian LNG is delivered in the EU are located in France, Spain, and Belgium. The Russian liquefied gas plant Yamal LNG still has agreements with some of the biggest energy companies in Europe, including the British company Shell and the Spanish company Naturgy, "FT" emphasized.
